Abstract
This study aims to examine and explain the effect of intellectual capital and capital adequacy on credit risk and financial performance. Effect of credit risk on financial performance. The study population was 43 with a sample of 31 Commercial Banks that had been listed on the Indonesia Stock Exchange. The observation period from 2012 to 2016. The sampling method was purposive sampling, data of 155 bank financial statements. The data analysis technique uses statistical procedures to test hypotheses with the Generalized Structured Component Analysis (GSCA) software.The finding of this study is that intellectual capital has a negative and significant effect on credit risk. Intellectual capital has a positive and significant effect on financial performance. Capital adequacy has a positive and significant effect on credit risk, and financial performance. Credit risk has a negative and significant effect on financial performance. This study suggests that managers of banks, especially bank go public, pay more attention to the variable intellectual capital in the sense that any additional investment in the 3 IC components (human capital, structural capital and capital employed) can be efficiently used to create value added and increase company value. IC is the only source of value creator in the future, which implicitly utilizes tangible and intangible assets and mitigates risk optimally. Recommendations for further research can expand the general banking sector population in longer research periods to get better results. Keywords : Intelletual capital, capital adequacy, credit risk, financial performance DOI : 10.7176/RJFA/10-10-22 Publication date :May 31 st 2019
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